Support abolition of Leasehold replacing with Commonhold

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I attended a residents association meeting with our local MP Friday evening, discussing the problems we are having with our management company. Apart from the local issues which are serious, we managed to get buy-in from our MP Ed Vaizey to support the abolition of Leasehold in favour of Commonhold, which he agreed to speak to fellow MP’s about.

The discussion about Leasehold and Commonhold is now gathering pace nationwide. The Guardian, Mail and the Major of London have all campaigned against the recent development of Leasehold houses, but mainly for new and first time buyers.

However, many Property118 readers will own Leasehold properties, believing they own the property, they don’t, or believe it will rise in value to cover any losses from taxes, investments etc, it won’t and may be a major liability if the length of the lease is less than 80 years!

There is a time bomb waiting to go off and could cause many Landlords financial ruin!

My thoughts were to look at the problem from a Landlord’s perspective, run articles, champion the cause and raise it a different level to us at a local level. Even if it was only to raise the awareness of the current Petition or the Governments Commonhold survey.

Millions are trapped in this antiquated draconian leasehold system. This is a “feudal” form of land ownership. It is about time we Abolished Leasehold once and for all.

Professor Hopkins (law commissioner for England & Wales for property) recently gave evidence at the Leasehold Select Committee Inquiry stating “Looking at the landscape of leasehold legislation, I would have to say it is not fit for purpose as it is.”

The leasehold system is a form of financial servitude where the leaseholder is forever compensating the freeholder for living on ‘their land’. Commonhold exists and should be compulsory. Aim of National Leasehold Campaign : ABOLISH LEASEHOLD

“The National Leasehold Campaign (NLC) has been set up to campaign for the abolition of residential leasehold in England and Wales. We want to see a complete ban on new leasehold houses, the adoption of commonhold for new flats and apartments, as well as full and proper redress for the millions of people currently trapped in leasehold properties. We believe that all houses should be freehold and all flats/apartments commonhold.” >> https://nationalleaseholdcampaign.org/

Leasehold Advisory Service

“What is commonhold?

Commonhold is a new type of property ownership, an alternative to the long leasehold system. It allows freehold ownership of individual flats, houses and non-residential units within a building or an estate. Ownership is not limited by time as it is with a lease.

The rest of the building or estate forming the commonhold is owned and managed jointly by the flat or unit-holders, through a commonhold association.

How commonhold works

A commonhold can only be created out of freehold land, or a freehold building, and comes into effect when the land is registered at the Land Registry as a commonhold. A commonhold can be a new building or an existing building or unbuilt land.

Once the commonhold is in place, the new law provides a statutory framework of rights and obligations between the owners of each flat (referred to as unit-holders) and between the unit-holders and the commonhold association.

The framework is relatively simple:

The freehold estate in commonhold land is divided into units and common parts. A unit may be a flat, or may have some non-residential use like an office or shop, and could include a garage or a parking space. The Land Registry will create a registered title per unit and one for the common parts.

Each unit-holder owns the freehold of a unit. As a freehold, the unit will not be subject to restrictions on its sale or transfer or be subject to forfeiture; however, its use will be governed by the rules of the commonhold.

The common parts are every part of the building that is not contained in a unit, for example, in a commonhold comprising a block of flats, the common parts will include the actual structure – the walls and roof, the lift and the stairs etc, and common areas such as the corridors and entrance hall, the car park etc. The freehold of the common parts is owned by the commonhold association.

The unit-holder is entitled to be a member of the commonhold association. Only unit-holders within the commonhold may be members of the association and ownership of the unit provides the entitlement to be a member, although there are special rules in relation to joint owners.

The commonhold association is a limited company, registered at Companies House. It is run according to its Articles which are available for inspection at both Companies House and the Land Registry. The Articles are prescribed by the regulations and set out the functions of the commonhold association.

The commonhold association is subject to the provisions of the Commonhold and Leasehold Reform Act 2002, the Commonhold Regulations 2004 and the Commonhold Community Statement (CCS). The CCS will define the extent of each unit and the common parts and the percentages each unit will contribute to the running costs of the building. It will also set out the duties and obligations of the commonhold association and of each unit-holder. This is similar to the rights and obligations of both freeholder and a leaseholder contained in leases, but the difference is that there will only be one document for the whole building, not one per flat. The Commonhold Community Statement will be registered along with the commonhold association’s title at the Land Registry.

The CCS provides for a commonhold association to set a commonhold assessment, the estimate of the overall costs of the general operation of the building, its maintenance, repair and insurance. There may also be one or more reserve funds.

The commonhold association will request payment from each unit-holder in accordance with the percentage allocated to each unit in the Common-hold Community Statement.

Although the unit-holder will own a freehold flat, he or she will not have complete freedom to do anything he wishes in the property. The use and occupation of the flat will be subject to the rules of the Commonhold Community Statement, perhaps relating to letting, alterations and nuisance, similar to the restrictions often contained in leases.

The unit-holder will have the opportunity to actively participate in the decision-making process in the running of the building. In managing the building the commonhold association will have a role similar to a landlord under a lease, but the difference in a commonhold is that the unit-holder will be represented in that association and be able to express a view on management. This will bring responsibilities. Commonhold is based on ownership and management of the common asset, the building, by the group of unit-holders; as such, each unit-holder should be prepared to be involved in decision making, to attend and vote at meetings of the commonhold association. This principle of self-management means that unit-holders will not need, and do not have, many of the various statutory rights and protections available to leaseholders.

The commonhold association

The commonhold association is the vehicle which owns and manages the common parts of the building or estate, and to which all unit-holders belong. It is a company limited by guarantee which means that its members, the unit-holders, are limited in their personal financial liability should the company collapse or be wound-up; the legislation limits that liability to £1 per member. There are no shares or share capital. Although an ordinary company under company law, the commonhold association is subject to special rules.”

Many Thanks

David

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Comments

We are working hard to spread the word about the scandal of many leaseholds, doubling ground rent, uncapped service charges etc. Up and down the country, thousands of leasehold new builds are being thrown up in haste and sold under onerous,cleverly worded contracts. Please sign the petition. England and Wales are the only places that still have this antiquated, outdated feudal system. Many of these freeholds are sold on to faceless companies registered in tax havens like the Virgin Islands. The NLC are an amazing, proactive campaign group with over £14,000 members to date.https://nationalleaseholdcampaign.org

I tried to convert my block of 100 flats from Leasehold to Commonhold many years ago and was met with ferocious opposition from a few of the leaseholders. Many court cases and tens of thousands of pounds later the block remains Leashold.
The problem is that government regulations require the consent of everybody, leasholder, morgage companies, second charge holders etc. One dissenter and the conversion is dead.

Reply to the comment left by David Price at 13/03/2019 - 15:04The law commissions consultation that close on Sunday would address such issues so that moving over to commonhold would be possible without 100% agreeing. The law commission was asking for people views on how this could work. They are committed to making it a viable option. The sector just needs to change their mindset. They are so fixed on leasehold they fail to accept anything else could work. Even though what we have with leasehold is clearly not working and not acceptable in the 21st century.
Leasehold is a feudal outdated abusive system and MUST be abolished.

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